Acetic Acid Prices Braces for Improvement in Q2 2024 in Belgium Market

Antwerp (Belgium): The prices of Acetic Acid have declined as of this week in Belgium. This development was due to weak support from Feedstock Methanol, as Methanex, in its monthly report, quoted that the contract prices of methanol remained on the lower side. However, market participants expect a reversal in fortunes and an improvement in prices in the 2nd quarter of 2024 amidst an increase in seasonal demand from downstream derivatives.

On the supply front, the plants producing Acetic Acid were operating at a stable rate, leading to adequate inventories in the market. Furthermore, the prices of imports from the Chinese market declined as of this week, leading to more downward pricing pressure on Acetic Acid. As Acetic Acid manufacturers were operating at a stable rate, there were adequate inventories in the market to meet downstream demand. The Red Sea crisis continues to generate challenges for the supply of Acetic Acid in the Belgian market as freight charges are high, but the demand from downstream industries continues to subdue the rise in the prices of Acetic Acid in Belgium.

The demand from Acetic Acid downstream industries, such as Ethyl Acetate and Butyl Acetate, which are mainly used in the construction sector, has remained subdued due to persistent high inflationary pressures. Peter R. Huntsman, Chairman, President, and CEO, observed a modest improvement in early 2024 compared to the lows experienced in the fourth quarter of 2023.

Despite ongoing uncertainty regarding the timing of a clear demand rebound, Huntsman maintains an optimistic outlook for the future. The company expects to leverage volume advantages once demand increases and is dedicated to cost management. While the precise timing of the recovery remains uncertain, there is confidence that construction spending and industrial activity in key markets will eventually return to previous levels, with a continued focus on energy efficiency and lightweight materials, which constitute a significant portion of overall sales.

The European Central Bank has maintained the interest rate at 4.5%, which is relatively high, resulting in decreased purchasing power for downstream consumers. It is anticipated that the prices of Acetic Acid in the Belgian market will rise amidst the lowering interest rate, which will lead to an increase in the purchasing power of downstream industry consumers. Energy costs are expected to rise, and the price of upstream Methanol is likely to rise, leading to higher production costs. Furthermore, the prices of imports from the international market like the Chinese market, which is one of the top exporters of Acetic Acid to Belgium, are expected to rise further, leading to a rise in the domestic cost of Acetic Acid in the Belgian market.

The overall pace of recovery has been on the lower side for Acetic Acid; traders were selling inventories at lower prices in order to increase market transactions. However, the overall short-term outlook looks pessimistic amidst lower downstream industries. However, in Q2 2024, the market expects some growth with improvement in consumption from paints and coatings and other allied industries.